Transactional Sales Verses Strategic Sales

Think about this.  Sellers do not control the product, they do not control the price, and they do not control industry presence.  They only control how they sell.  In other words, in a competitive sales environment it is not your product against their product, or your price against their price, or your company’s name against their company’s name. It is, in reality, your sales process against their sales process.

I do not mean to disrespect product, price, industry presence, or brand as factors in the buyer’s decision making process.  I do believe however, that a formal sales process incorporates these factors and controls specifically how they are used.

Process is about taking something through a standardized set of procedures to convert it from one form to another form; for example, turning a preliminary sales meeting into a quote, and then into a sale. Process is about discipline and being able to clearly identify a step that does not work and being able to change that step so that it does work. When a sales training company delivers a training program for its particular sales methodology, it is delivering a process: a standardized set of operating procedures that gets an identified result the majority of the time when you follow the process.

Let me illustrate the concept. Basically, there are two types of sales opportunities in business to business sales; transactional and strategic. Transactional is commodity or price oriented, whereas strategic is more business value oriented.   With a strategic sales opportunity strategy and tactics are involved.  

Consider these ten questions as a means to tag the opportunity as transactional or strategic.  Answer the questions as ‘True’ or ‘False’. The higher the number of true answers, the higher the probability that the sales opportunity is strategic in nature.

1. Face-to-face contact is expected and/or is required by the buyer and can be financially justified?
2. The opportunity was discovered early in the sales cycle?
3. The opportunity has an extended sales cycle timeline (greater than three months)?
4. The opportunity fits within one of our core business offerings?
5. You have a moderate to high probability of meeting with the people who own the current project?
6. You have a moderate to high probability of meeting with the people who own the problem linked to the project?
7. You have a moderate to high probability of meeting with the people who own the strategy linked to the problem?
8. The dollar value of this opportunity is higher than your YTD average deal size won?
9. The client has encouraged the incumbent and other vendors to bid on this opportunity?
10. There are "no ground rules" that control or prohibit seller to buyer interaction?

In closing, I recommend the following as first step in your sales process. Determine if the sales opportunity is transactional or strategic in nature. 

The source of a transactional sales opportunity can be from an inbound or outbound lead. The seller’s Closing Rate, or what I call a Decision Rate, is usually lower. The average dollar value is also on the low side. There is always competition, be it internal or external. Resale opportunities are much more difficult.  The time investment by the seller is usually minimal.

The source of a strategic sales opportunity can be inbound. The majority, however, are outbound driven by the seller. The Closing Rate is higher when the seller follows a formal sales process designed for complex sales. The average dollar value of the deal is also higher than a transactional sales opportunity.   The probability of competitive forces at work is high, but they are more tactical in nature. The ability to drive additional revenue streams is higher. And finally, the time invested by the seller to win a strategic opportunity is usually significant.  

The bottom line is this. Transactional business pays the rent and electric. Strategic opportunities grow the business and drive higher profit margins. Without formal sales process to follow we cannot control how best to invest our time.